Counting the costs

The Queensland floods are beginning to be called Australia’s Hurricane Katrina, with a back of the envelope estimate of $10 billion in costs.

While no comparison with the $110 billion the US lost, it brings similar political, economic and social pain.

Keeping a close eye on the bill is AMP Capital chief economist
Shane Oliver
. “The short-term costs are horrendous," he says.

“You are looking at a $6 billion blow to GDP alone, then costs of $2 billion to $5 billion for damage to assets and reconstruction. That’s ignoring the costs to households in terms of food and energy."

At least $1 billion has been lost in coal and iron ore shipments, with the Queensland Resources Council estimating that $100 million is blost every day.

Dozens of companies are declaring hits to earnings forecasts, including
Macarthur Coal
, newly listed
QR National
,
Asciano
,
PrimeAg Australia
,
Australian Agricultural Company
and
Coca-Cola Amatil
, to name a few.

Analysts are downgrading price targets for stocks such as Leighton Holdings and Boral.

Company Profile

More than $400 million in cotton has been lost to the flood. The sugarcane industry has lost $230 million in production. Grains has lost 750,000 tonnes and other crops such as sorghum are under water. Cattle have drowned and damaged levies and dams will require an average of $250,000 to be spent on each on them.

The insurance bill is climbing, with estimates of up to $1.2 billion.

Suncorp
, which has already received more than 2000 claims, says the floods are a material event. It is hoping the prevalence of high-standing Queenslander homes will keep in check the need for home damage insurance.

Seven state schools and one TAFE institute in the south-west of the state have been damaged, leading to almost $77 million in federal funding being brought forward.